advice on getting a mortgage on 20k a year

100saving

hello all,

i am on 20k a year and am looking at buying a studio flat for 140k

i currently have 11k in isa and could get 5k together if i needed to from my mum and dad or using credit cards but i would rather not do this.

i am saving 900 a month at the moment.

can anyone give me advice on getting this flat for 140k using these factors or if i can't have this what i should do over the next year to get the best mortgage.

thanks very much in advance

monty-doggy

It's unlikely you will get 126k mortgage with 20k earnings. Most you'd prob get is 80-100k

A purchase at 140k you will need approximate 2500 for stamp duty and legal fees.
14k deposit for 10%.

90% loan to value will give you higher interest rates.

Have you had a play with the mortgage calculators to help you work out what's best and how much savings you need?

http://www.moneysavingexpert.com/mortgages/how-much-mortgage-borrowing#result

ACG

At best i would say you could get a £100k mortgage, although i imagine it will be closer to £80-90k, so you would effectively need a £50k deposit.

100saving

i had a quick pay. my credit score is very good! never missed a payment on my 2 credit cards, i only spend 50-100 on them a month and have a direct debit to pay them off in full. i only got the credit cards for the cash back and to build a credit rating.

in other words i should have added that i am saving to buy a property. but don't need to buy on right now. but think it would be better to buy a property an just save the money in the bank?

i live with my mum and dad thats why i can save 900ish a month. basically i just want to amass as much money/investments as i can in the next 25/30 years so i can stop working (currently 22 years old) the way i was thinking of doing this is to invest in property.

would you recommend just saving for 1to2 years before buying or buy now? property prices are going up so don't want to miss the bump.

monty-doggy

If you live at home you don't really have any idea about budgeting and how much it costs to run a house! If you earn 20k then your income is 1260-1300 a month?
A mortgage of 126k at 10% deposit will cost about £640 a month at 3.6%

That's before council tax
Gas
Water
Electric
Insurance contents
Insurance building
Phone
Food
Living costs
Plus a million other living costs.

Then what happens if your boiler breaks? Or you need roof repairs?

How do you plan to pay for it when almost half your wage is mortgage payments?

What if the interest rates rise?

You've a lot to consider before you make such a big commitment!

lawriejones1

A studio is a pretty poor investment moving forward. It's great to save and at 22 quite prudent to think of retirement already, but don't let it dominate your thoughts.

My advice would be to invest some in a good pension plan and enjoy the rest - go travelling, experience the world and get out of living with your parents!

innovate

100saving wrote: »

my credit score is very good!

Your credit scores as worked out by the CRAs are quite irrelevant. No lender will look at it. Lenders will do their own assessment of whether they will give you any money.

Of course they will consult your CRA files, but not to look at the score. They will look at your outstanding credit and how well you have been managing your finances. So having a clean CRA files is pretty vital - -- but the score is irrelevant.

Thrugelmir

100saving wrote: »

i live with my mum and dad thats why i can save 900ish a month. basically i just want to amass as much money/investments as i can in the next 25/30 years so i can stop working (currently 22 years old) the way i was thinking of doing this is to invest in property.

The future is to uncertain to back a single investment now. You need a multi stringed bow to your approach. Your first property should be treated as a home not an investment. To retire early you will need a source of a good income. For this a combination of a pension plan and invesments\cash savings held in ISA's would provide a solid base.

While you are living at home you should therefore spread your savings across your objectives. Obviously the maximum should be used towards the property deposit. As if that's the price of a studio flat. Buying any property is going to require a hefty deposit.

SG27

Stay at home for another 5 years and keep saving. You'll have another £54000 in savings by then plus interest and you'll probably be earning more. Then you can get a small house rather than a studio flat. You'll also have better loan to value and get a much better interest rate. Personally I think it's very unlikely that house prices will rise much if it all over the next 5 years so you won't be missing out. (Unless you live in London)

lawriejones1

Stay at home for another 5 years???!!! Get out of there and give your parents some space!

Get out and live your life, find a partner to share yor life and your house and see some of the world.